City council nixes local bid preference idea

Craig City Council members didn't buy in on a suggestion that the city institute a policy to give preferential treatment to local businesses.

They decided during a work session Tuesday night that changing the city's bid policy might create more problems than it solved.

Twice last year council members were faced with awarding bids to out-of-town businesses when a local business was within a few dollars of the low bid. City charter requires the city to award a contract to the low bidder with few exceptions -- geography isn't one of them.

On both of those occasions, the council discussed changing its bid policy to give some sort of upper hand to local businesses.

Three other Colorado communities give local businesses an advantage when their bid is within a certain dollar amount or within a certain percentage of the low bidder. Rifle offers a sliding scale. If a local bid under $40,000 is within a certain percent based on the total cost of the low bidder, they win the bid. In Brighton, area businesses can win a bid if they are within 5 percent or $500 of the low bidder.

The state of Colorado gives preference to bidders from within the state if the low bid was submitted by a company based out of another state that gives local preference.

Those few examples weren't enough to convince council members that adopting their own policy would benefit the city.

"One of my concerns is why are there only three cities in Colorado that do this? There's got to be something wrong," Councilor Don Jones said.

City Manager Jim Ferree said a local preference bid policy has its pros and cons. The city would run the risk of losing some competition if out-of-area businesses stop bidding because they're at a disadvantage, he said.

"I tend to believe competition will be harmed if we adopt this," Councilor Bill Johnston agreed.

That lack of competition means the city may be paying higher prices.

On the other hand, Ferree said, the policy favors local businesses that contribute to local charities and help the city in other ways.

Ferree said most of the city's day-to-day purchases -- the ones that don't require a formal bid process -- are made locally.

The city is required by its charter to request formal bids on anything costing more than $5,000 and usually ask for formal bids on all purchases above $2,500.

"I originally thought this was pretty good, but the more I got to thinking about it, the more concerns I had," Councilor Tom Gilchrist said. "We talk about businesses that donate to local charities, but there are a lot of individual people who donate to charities and we don't subsidize them. I think it would create more problems than it would solve."

Mayor Dave DeRose said the solution was in a better bid evaluation process. He said city staff should analyze bids and come to the council with a favored choice based on the bid specifications.

"I don't like being in the hot seat," he said.

City Attorney Sherman Romney said language could be added to the policy that would require the city to choose the lowest "responsible" bidder. The language also could allow city staff to use its knowledge of the product, the company's history, its references and the city's past experience as justification for awarding, or not awarding, a bid.

No council members disagreed with the decision to not give preference to local businesses.

"During our budget process, we sweat over $3,000 or $4,000," Ferree said. "It would be hard to justify giving up that amount of money over a year."

Christina M. Currie can be reached at 824-7031, Ext. 210 or by e-mail at ccurrie@craigdailypress.com.